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Thread: To Buy or To Rent?

  1. #16
    Luv Saving People Money MortgageQueen's Avatar
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    I think the poster has a balanced view and will do what's right for you. The KEY IS. . . you're investing. Just be careful to diversify. Many people lost a large chunk of their investments in 2009 and it could happen again.

    It's an individual decision and NO ONE should be pressured or bullied into making a decision they are not comfortable with
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  2. #17
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    Just my two cents in the matter.

    If I am paying rent say for a 10 year period at $1000.00 per month let's just say. That is $120,000 over the time. If you have a mortgage over that same 10 years at $1000.00 per month, yes, OK the bank will take about half, but look at it this way, you just put $60,000 in your pocket, not the Landlords.

    Again, just my two cents.....

  3. #18
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    Quote Originally Posted by maggiespice View Post
    Just my two cents in the matter.

    If I am paying rent say for a 10 year period at $1000.00 per month let's just say. That is $120,000 over the time. If you have a mortgage over that same 10 years at $1000.00 per month, yes, OK the bank will take about half, but look at it this way, you just put $60,000 in your pocket, not the Landlords.

    Again, just my two cents.....
    True....but some people have to remember that home ownership is much more then just paying the mortgage payment.

    There is:

    House insurance (cost is much more then tenant insurance)
    Property taxes
    water and sewer bill (this bill can not be passed on to tenants in some towns-yes the landlord would make your rent payment cover it but is something to keep in mind that it is an actual bill for home owners)
    Maintenance- This is huge. Houses need repairs.
    Appliances- homeowners problem

    I could go on but that is some things to think about. Somedays I wish I could just pay someone the rent and then let them take care of everything else.
    Last edited by Frugalbigmama; Mon, Dec 5th, 2016 at 02:33 PM.
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    Quote Originally Posted by momof5boys View Post
    There are previous renters in our community that are literally camping because they have no place to go. The rental was sold from under them and there are virtually no homes for rent in our area at the moment. For me owning is peace of mind, especially with a family.
    The same thing is happening in our community,cheaper to buy a condo for $1200 (including fees and insurance,btw.)
    than rent it for $1500.
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  5. #20
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    Quote Originally Posted by maggiespice View Post
    Just my two cents in the matter.

    If I am paying rent say for a 10 year period at $1000.00 per month let's just say. That is $120,000 over the time. If you have a mortgage over that same 10 years at $1000.00 per month, yes, OK the bank will take about half, but look at it this way, you just put $60,000 in your pocket, not the Landlords.

    Again, just my two cents.....
    Yes but that is in the perfect scenario where the house you bought is problem free. I had two house inspections and later spent over $20,000 on hidden problems. Even buying new you are not guaranteed to have a problem free place. As for condos you are at the mercy of the condo corporation and fees do go up. I was looking at a unit that has condo fees of $650 and that was not including hydro or property tax or mortgage. Research all the alternatives and be prepared for unexpected costs with home ownership. Depending on the situation - renting sometimes is best. Also you have to take in consideration your job and your health. If you suddenly become disabled home ownership will be next to impossible with a mortgage.
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  6. #21
    tightwad and proud of it! brunt's Avatar
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    There is another aspect of the whole own versus rent debate that is all too often ignored - the costs of moving away from your residence to a new location.

    For a bit of background, my wife and I had a serious revelation 18 years ago about our financial future - we were barely squeaking by, and there was no clear path for it to get any better. We decided to do whatever it took to remedy this situation while still not selling our souls to the devil in the process.

    In short, I took a high paying job elsewhere, we put our house up for sale, and we moved and rented while we got established. It took six long months to sell our house. Six months of living apart, in separate countries, while we desperately tried to sell our house.

    We just counted it up a short while ago - in 15 years, we moved 7 times as my job demanded it. Each time you sell your house, you are paying 5% of your house's value to a real estate agent. At average house prices, this would have cost us a whopping $87,500 during this period. And this is not to count the land transfer taxes, legal costs and mortgage penalties that are all unique to buying over renting.

    So much of this decision is dependent on your job. So sure, if you are retired or work for a government with guaranteed employment until you wish to cash in, then buy whatever you can afford. But if you are just a working schlub who has to move whenever and to wherever he is told, and is not paid moving expenses by his employer, then renting is definitely something to at least consider.

    It just drives me nuts on this highly complicated issue when people spout simplistic maxims as if there were a universal truth to real estate ownership. This is not an easy question, and there are no easy guaranteed answers. Any answer should always start with "it depends...".

  7. #22
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    Quote Originally Posted by barbis9 View Post
    Just my two cents in the matter.

    If I am paying rent say for a 10 year period at $1000.00 per month let's just say. That is $120,000 over the time. If you have a mortgage over that same 10 years at $1000.00 per month, yes, OK the bank will take about half, but look at it this way, you just put $60,000 in your pocket, not the Landlords.

    Again, just my two cents.....
    Yes but that is in the perfect scenario where the house you bought is problem free. I had two house inspections and later spent over $20,000 on hidden problems. Even buying new you are not guaranteed to have a problem free place. As for condos you are at the mercy of the condo corporation and fees do go up. I was looking at a unit that has condo fees of $650 and that was not including hydro or property tax or mortgage. Research all the alternatives and be prepared for unexpected costs with home ownership. Depending on the situation - renting sometimes is best. Also you have to take in consideration your job and your health. If you suddenly become disabled home ownership will be next to impossible with a mortgage.
    Not to mention the fact that property taxes are about 1.5% of the house's value per year. Assuming a roughly $240,000 house - then years of that takes another $36,000. Whooops, there goes a good chunk of the expected cash in your pocket.

    Maintenance takes about 1% per year, or about $24,000 for the ten years. House insurance about 0.5%, or another $12,000. You are now theoretically losing $12,000 over the ten years. Time to sell your house? As I mentioned previously, there goes another 5%, or $12,000 assuming that you sold only once in the ten years. If you had my track record with having to move for your job, this would be a much larger cost.

    Of course, if you had $120,000 of equity in your house, then investing in rock solid bank stocks would give you a steady 4% return on that money if you rented and invested intead. Over ten years, there goes another whopping $48,000 of potential income that is given up from owning.

    So where are we? $72,000 in the hole, or over $7,000 per year. That's a heck of a bit of price appreciation that would be required to overcome that sort of expense. In this scenario, renting does not look so bad. And don't forget, we have not even considered the possibility of a blown furnace, leaky roof, backed up sewer or any other of dozens of potential nightmares.

    I still remember my first mortgage was at 12.625%, which was down considerably from the years before we bought. If you are buying a house counting on mortgage rates remaining at today's insanely low rates, then I can almost guarantee that this will end in tears.

    I may come across as being anti-owning, but truth be told, I own currently. There are arguments for both. Yes, there are potential financial benefits of owning, as there are psychological benefits. But owning is unquestionably a potential financial minefield

    But people, particularly people who are asking for advice on buying are being mislead regarding the financial obligations of owning. Young people are naive enough to take such advice without being aware of the possible negative repercussions of owning.

    And yes, a word to all people who do not yet own but lust for a house - by all means ask for advice, but always remain skeptical about the responses that you receive. Learn the sorts of costs that come with owning, and see if your budget can handle them. Be brutal, and assume that you have made some mistakes and under counted the costs. Buying a house is not a take-it-to-the-bank guaranteed winning lottery ticket.

    Learn how to estimate the costs now, or buy and learn how to estimate the hard way. Either way, you will learn about them. But for the good of you long-term financial well-being, you are better off learning about the costs before you sign on that dotted line.
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